Thursday, September 16, 2010

"Is it really true that political self-interest is nobler somehow than economic self-interest?" -- Milton Friedman

Here is a pretty interesting interview from him on Donahue:

Donahue asks: "When you see around the globe the mal-distribution of wealth, the desperate plight of millions of people in undeveloped countries … when you see the greed and the concentration of power, did you ever have a moment of dou...bt about capitalism and whether greed is a good idea to run on?"

Friedman responds, "Is there some society out there that doesn't run on greed? Do you think Russia or China doesn't run on greed? What is greed? Of course none of us are greedy; it's only the other fellow who's greedy. The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus. Einstein didn't construct his theory under order from a bureaucrat. Henry Ford didn't revolutionize the automobile industry that way. In the only cases in which the masses have escaped from the kind of grinding poverty you're talking about they have had capitalism and largely free trade. If you want to know where the masses are the worst off, it is exactly in the kinds of society that depart from that. So that the record of history is absolutely crystal clear: that there is no alternative way so far discovered of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system."

Mr. Donahue: "But it seems to reward not virtue so much as ability to manipulate the system."

Friedman says, "And what does reward virtue? Do you think the communist commisary rewards virtue? You think a Hitler rewards virtue? Do you think American Presidents reward virtue? Do they choose their appointees on the basis of the virtue of the people appointed or on the basis of their political clout? Is it really true that political self-interest is nobler somehow than economic self-interest? I think you are taking a lot of things for granted. Just tell me where in the world you're going to find these angels who are going to organize society for us? I don't even trust you to do that!"

Wednesday, July 21, 2010

A decade ago, activist Ron Unz conducted a study of the ethnic and religious composition of the student body at Harvard.

Blacks and Hispanics, Unz found, were then being admitted to his alma mater in numbers approaching their share of the population.

And who were the most underrepresented Americans at Harvard?

White Christians and ethnic Catholics. Though two-thirds of the U.S. population then, they had dropped to one-fourth of the student body.

Comes now a more scientific study from Princeton sociologists Thomas Espenshade and Alexandria Radford to confirm that a deep bias against the white conservative and Christian young of America is pervasive at America's elite colleges and Ivy League schools.

Wake up! This is the reality of what Christian students face in the secular world of academia.

Elite college admissions officers may prattle about "diversity," but what they mean is the African-American contingent on campus should be 5 percent to 7 percent, with Hispanics about as numerous.

However, "an estimated 40 percent to 50 percent of those categorized as black are Afro-Caribbean or African immigrants, or the children of such immigrants," who never suffered segregation or Jim Crow.

To achieve even these percentages, however, the discrimination against white and Asian applicants, because of the color of their skin and where their ancestors came from, is astonishing.

As Nieli puts it, "Being Hispanic conferred an admissions boost over being white ... equivalent to 130 SAT points (out of 1,600), while being black rather than white conferred a 310-point SAT advantage. Asians, however, suffered an admissions penalty compared to whites equivalent to 140 SAT points."

"To have the same chance of gaining admission as a black student with a SAT score of 1100, a Hispanic student otherwise equally matched in background characteristics would have to have 1230, a white student a 1410 and an Asian student a 1550."

Was this what the civil-rights revolution was all about – requiring kids whose parents came from Korea, Japan or Vietnam to get a perfect SAT score of 1600 to be given equal consideration with a Jamaican or Kenyan kid who got an 1150? Is this what it means to be an Ivy League progressive?

What are the historic and moral arguments for discriminating in favor of kids from Angola and Argentina over kids whose parents came from Poland and Vietnam?

There is yet another form of bigotry prevalent among our academic elite that is a throwback to the snobbery of the WASPs of yesterday. While Ivy League recruiters prefer working-class to middle-class black kids with the same test scores, the reverse is true with white kids.

White kids from poor families who score as well as white kids from wealthy families – think George W. Bush – not only get no break, they seem to be the most undesirable and unwanted of all students.

Though elite schools give points to applicants for extracurricular activities, especially for leadership roles and honors, writes Nieli, if you played a lead role in Future Farmers of America, the 4-H Clubs or junior ROTC, leave it off your resume or you may just be blackballed. "Excelling in these activities is 'associated with 60 or 65 percent lower odds on admissions.'"

For admissions officers at our top private and public schools, diversity is "a code word" for particular prejudices.

For these schools are not interested in a diversity that would include "born-again Christians from the Bible belt, students from Appalachia and other rural and small-town areas, people who have served in the U.S. military, those who have grown up on farms or ranches, Mormons, Pentecostals, Jehovah's Witnesses, lower- and middle-class Catholics, working-class 'white ethnics,' social and political conservatives, wheelchair users, married students, married students with children or older students just starting into college and raising children."

"Students in these categories," writes Nieli, "are often very rare at the most competitive colleges, especially the Ivy League."

"Lower-class whites prove to be all-around losers" at the elite schools. They are rarely accepted. Lower-class Hispanics and blacks are eight to 10 times more likely to get in with the same scores.

That such bigotry is pervasive in 2010 at institutions that preen about how progressive they are is disgusting. That a GOP which purports to represents Middle America, whose young are bearing the brunt of this bigotry, has remained largely silent is shameful.

Many of these elite public and private colleges and universities benefit from U.S. tax dollars through student loans and direct grants. The future flow of those tax dollars should be made contingent on Harvard and Yale ending racial practices that went out at Little Rock Central High in 1957.

Pat Buchanan was twice a candidate for the Republican presidential nomination and the Reform Party's candidate in 2000. He is also a founder and editor of The American Conservative. Now a political analyst for MSNBC and a syndicated columnist, he served three presidents in the White House, was a founding panelist of three national TV shows, and is the author of seven books.

Thursday, July 15, 2010

Why did Bernie Madoff go to prison? To make it simple, he talked people into investing with him. Trouble was, he didn't invest their money. As time rolled on, he simply took the money from the new investors to pay off the old investors. Finally there were too many old investors and not enough money from new investors coming in to keep the payments going.

Next thing you know Madoff is one of the most hated men in America, and he is off to jail.

Some of you know this... but not enough of you. Madoff did to his investors what the government has been doing to us for over 70 years with Social Security. There is no meaningful difference between the two schemes, except that one was operated by a private individual who is now in jail, and the other is operated by politicians who enjoy perks, privileges and status in spite of their actions.

Do you need a side-by-side comparison here?

BERNIE MADOFF: Takes money from investors with the promise that the money will be invested and made available to them later.

SOCIAL SECURITY: Takes money from wage earners with the promise that the money will be invested in a "Trust Fund" and made available later.

BERNIE MADOFF: Instead of investing the money, Madoff spends it on nice homes in the Hamptons and yachts.

SOCIAL SECURITY: Instead of depositing money in a Trust Fund, the politicians use it for general spending and vote buying.

BERNIE MADOFF: When the time comes to pay the investors back, Madoff simply uses some of the new funds from newer investors to pay back the older investors.

SOCIAL SECURITY: When benefits for older investors become due, the politicians pay them with money taken from younger and newer wage earners to pay the geezers.

BERNIE MADOFF: When Madoff's scheme is discovered, all hell breaks loose. New investors won't give him any more cash.

SOCIAL SECURITY: When Social Security runs out of money, they simply force the taxpayers to send them some more.

A new analysis of the U.S. economy shows that since 2007, the private sector has lost 10.5 million jobs while the public sector has added 720,000 jobs, creating a "death spiral" for the nation's economy.

The study comes from The Free Enterprise Nation, a nonpartisan national membership/advocacy organization for individuals and businesses that make up the private sector.

The analysis was done using statistics about employment data from the U.S. Bureau of Labor Statistics.

Don't wait until a collapse happens, get "Killing Wealth Freeing Wealth: How to Save America's Economy and Your Own" now!

The recession of the last two years exacerbated the larger problem that already was in place, it revealed.

"Over the 10-year period between March 2000 and March 2010, the private sector lost over three million jobs, while the public sector gained nearly two million jobs," the analysis concludes.

Among the changes were California's loss of 665,800 jobs in the private sector. But government in the Golden State added 163,800 jobs.

Also, Michigan lost 791,700 private-sector jobs, a "staggering" 20 percent. Government bureaucracies, however, kept all but 7 percent of their positions.

Jim MacDougald, president and CEO of The Free Enterprise Nation, recently appeared on the Fox News Channel to talk about a new campaign called "I own you."

North Carolina showed a 10-year loss of 138,200 private-sector jobs, or 4 percent of its private-sector workforce, while adding 127,100 government jobs, a 20 percent increase.

Colorado's population increased by 17 percent in the past decade while losing 3 percent of its private-sector jobs. Government employment increased by more than 17 percent during the same time frame.

Tennessee lost 157,300 private-sector jobs while adding 13,900 in government agencies.

While Texas added 616,000 private-sector jobs, it also added 295,200 government jobs, almost one bureaucratic position for every two positions in private enterprise.

Florida also added private-sector jobs overall – 39,600. But it also added 127,100 government positions.

Massachusetts lost 168,700 private-sector jobs but still found the need to add 7,500 government jobs.

Wisconsin lost 149,400 private-sector jobs; added 22,300 to government payrolls.

"The consequence of this employment shift is that a smaller number of private-sector employers and workers are saddled with the tax burden of financially supporting a growing government workforce," said MacDougald.

"Since public-sector workers are paid more on average in compensation and benefits than private-sector workers, it is financially unsustainable for the government to continue to grow while the private-sector workforce shrinks," he said.

He explained to WND that while the problem is massive, there is the potential for a solution.

"There are 89,000 taxpayer-supported entities that make up the 'public sector,' and no one is in charge of their collective efforts. About one-half of the 22 million public-sector workers are in public education. (And only about one-half of the people employed in public education are teachers!)" he said.

"It is possible that the federal government thinks it can solve the unemployment problem by hiring more people, but, if so, it would be another indication of just how far removed from reality the federal government's economic policies are," he said.

"Our population grew by 25 million from 2000 to 2010. We needed to create at least 20 million new jobs. Instead, we lost 3 million in the private sector. The 'shortfall' of 23 million jobs could not possibly be made up by government hiring, as they would have to double in size in order to do so," he said.

The real problem is not necessarily with the number of government jobs but the cost of their "huge pensions, early retirement and health-insurance benefits."

"That is where the real 'cost of government' is," he continued. "As numbers of workers in the private sector decrease, and public-sector hiring increases, it places an impossible burden on those individuals and businesses left who actually pay taxes.

"Unfortunately, the current approach is to charge more taxes to those who actually pay federal income taxes (one-half of tax filers), and businesses. Businesses (employers) have no choice but to reduce overhead, which means fewer domestic workers. A death spiral," he warned.

The solution would be a hard pill to swallow for many, he warned.

Among the moves that would help would be to terminate all government pension plans, "vesting everyone 100 percent in benefits accrued to date." Pensions could be replaced with a type of 401(k) retirement plan that is funded by employer contributions.

Then there would be need for a hard look at what government actually does.

"Do we NEED government to do that for us? If not, stop doing it," he said.

Next would be to ignore – or better yet banish – public-sector unions.

A "zero-based" staffing and budget plan would require officials to review what work is required and how many workers are needed to do it.

"Public policy-makers must ask: How many people do we NEED to do what we are hired to do? Do we really NEED one administrative/management employee for every teacher? Once those questions have been asked and answered, we must rebuild each public-sector entity from scratch," he said.

"We have to 'reinvent' the public sector, based on a fundamental requirement that it serves the taxpayer, not the other way around. It is a huge job to do, and it will take years. There is no silver bullet. But it can be done," he said.

And longtime top-rated radio talk-show host Roger Hedgecock said more and more federal spending just depresses the economy.

"Three professors at the Harvard Business School, in a study titled 'Do Powerful Politicians Cause Corporate Downsizing?' have concluded, based on 40 years of data, that federal government spending does not stimulate local business spending. In fact, the opposite occurred. The more federal spending, the less corporate spending," he reported.

"And the same results show up whether the state is large or small, whether the firms are large or small over a period of 40 years. In fact, the study shows the results 'most pronounced in geographically concentrated firms and within the industries that are the target of the spending.' In plain speech, federal 'bacon' is toxic to economic growth in the private sector," he wrote.

Last November there was a world-wide outcry when a trove of emails were released suggesting some of the world's leading climate scientists engaged in professional misconduct, data manipulation and jiggering of both the scientific literature and climatic data to paint what scientist Keith Briffa called "a nice, tidy story" of climate history. The scandal became known as Climategate.

Now a supposedly independent review of the evidence says, in effect, "nothing to see here." Last week "The Independent Climate Change E-mails Review," commissioned and paid for by the University of East Anglia, exonerated the University of East Anglia. The review committee was chaired by Sir Muir Russell, former vice chancellor at the University of Glasgow.

Mr. Russell took pains to present his committee, which consisted of four other academics, as independent. He told the Times of London that "Given the nature of the allegations it is right that someone who has no links to either the university or the climate science community looks at the evidence and makes recommendations based on what they find."

No links? One of the panel's four members, Prof. Geoffrey Boulton, was on the faculty of East Anglia's School of Environmental Sciences for 18 years. At the beginning of his tenure, the Climatic Research Unit (CRU)—the source of the Climategate emails—was established in Mr. Boulton's school at East Anglia. Last December, Mr. Boulton signed a petition declaring that the scientists who established the global climate records at East Anglia "adhere to the highest levels of professional integrity."

This purportedly independent review comes on the heels of two others—one by the University of East Anglia itself and the other by Penn State University, both completed in the spring, concerning its own employee, Prof. Michael Mann. Mr. Mann was one of the Climategate principals who proposed a plan, which was clearly laid out in emails whose veracity Mr. Mann has not challenged, to destroy a scientific journal that dared to publish three papers with which he and his East Anglia friends disagreed. These two reviews also saw no evil. For example, Penn State "determined that Dr. Michael E. Mann did not engage in, nor did he participate in, directly or indirectly, any actions that seriously deviated from accepted practices within the academic community."

Readers of both earlier reports need to know that both institutions receive tens of millions in federal global warming research funding (which can be confirmed by perusing the grant histories of Messrs. Jones or Mann, compiled from public sources, that are available online at freerepublic.com). Any admission of substantial scientific misbehavior would likely result in a significant loss of funding.

It's impossible to find anything wrong if you really aren't looking. In a famous email of May 29, 2008, Phil Jones, director of East Anglia's CRU, wrote to Mr. Mann, under the subject line "IPCC & FOI," "Can you delete any emails you may have had with Keith [Briffa] re AR4 [the Intergovernmental Panel on Climate Change (IPCC) report]? Keith will do likewise . . . can you also email Gene [Wahl, an employee of the U.S. Department of Commerce] to do the same . . . We will be getting Caspar [Amman, of the U.S. National Center for Atmospheric Research] to do likewise."

Mr. Jones emailed later that he had "deleted loads of emails" so that anyone who might bring a Freedom of Information Act request would get very little. According to New Scientist writer Fred Pearce, "Russell and his team never asked Jones or his colleagues whether they had actually done this."

The Russell report states that "On the allegation of withholding temperature data, we find that the CRU was not in a position to withhold access to such data." Really? Here's what CRU director Jones wrote to Australian scientist Warrick Hughes in February 2005: "We have 25 years or so invested in the work. Why should I make the data available to you, when your aim is to try and find something wrong with it[?]"

Then there's the problem of interference with peer review in the scientific literature. Here too Mr. Russell could find no wrong: "On the allegations that there was subversion of the peer review or editorial process, we find no evidence to substantiate this."

Really? Mr. Mann claims that temperatures roughly 800 years ago, in what has been referred to as the Medieval Warm Period, were not as warm as those measured recently. This is important because if modern temperatures are not unusual, it casts doubt on the fear that global warming is a serious threat. In 2003, Willie Soon of the Smithsonian Institution and Sallie Baliunas of Harvard published a paper in the journal Climate Research that took exception to Mr. Mann's work, work which also was at variance with a large number of independent studies of paleoclimate. So it would seem the Soon-Baliunas paper was just part of the normal to-and-fro of science.

But Mr. Jones wrote Mr. Mann on March 11, 2003, that "I'll be emailing the journal to tell them I'm having nothing more to do with it until they rid themselves of this troublesome editor," Chris de Freitas of the University of Auckland. Mr. Mann responded to Mr. Jones on the same day: "I think we should stop considering 'Climate Research' as a legitimate peer-reviewed journal. Perhaps we should encourage our colleagues . . . to no longer submit to, or cite papers in, this journal. We would also need to consider what we tell or request our more reasonable colleagues who currently sit on the editorial board."

Mr. Mann ultimately wrote to Mr. Jones on July 11, 2003, that "I think the community should . . . terminate its involvement with this journal at all levels . . . and leave it to wither away into oblivion and disrepute."

Climate Research and several other journals have stopped accepting anything that substantially challenges the received wisdom on global warming perpetuated by the CRU. I have had four perfectly good manuscripts rejected out of hand since the CRU shenanigans, and I'm hardly the only one. Roy Spencer of the University of Alabama, Huntsville, has noted that it's becoming nearly impossible to publish anything on global warming that's nonalarmist in peer-reviewed journals.

Of course, Mr. Russell didn't look to see if the ugly pressure tactics discussed in the Climategate emails had any consequences. That's because they only interviewed CRU people, not the people whom they had trashed.

Mr. Michaels, a professor of environmental sciences at the University of Virginia from 1980-2007, is now a senior fellow at the Cato Institute.

Tuesday, June 29, 2010

For American taxpayers, now on the hook for some $145 billion in housing losses connected to Fannie Mae and Freddie Mac loans, that amount could be just the tip of the iceberg.

According to the Congressional Budget Office, the losses could balloon to $400 billion. And if housing prices fall further, the cost to the taxpayer could hit as much as $1 trillion.

Two things are clear: Taxpayers don’t want to foot the bill, and Fannie and Freddie, taken over by the government in 2008 to stanch the financial bloodletting, need a major overhaul.

“Some of us who don’t even own homes are paying to support others and their home ownership, and they ask ‘why?’ said Robert J. Shiller, a Yale University economics professor and co-creator of the S&P/Case-Shiller Home Price Indices.

The indices measure the US residential housing market by tracking changes in the value of residential real estate both nationally and in 20 metropolitan regions.

Shiller added that the mission of Fannie and Freddie should be severely cut back “so that they’re not helping middle-class homeowners, [but] they’re helping poor people get into the housing market.”

At the crux of the financial crisis, the government took over Fannie and Freddie to avert possible massive losses for banks, money-market funds and, perhaps, most importantly, foreign institutions that purchased billions of Fannie and Freddie debt because of its implied government guarantee.

The Chinese, for example, had invested heavily, and the US decided it didn’t want them to take a loss on their investment.

One possible scenario for the entities is to turn them into utilities, said Sean Dobson, CEO and chair of Amherst Securities.

“Freddie and Fannie could be used to standardize the mortgage product,” Dobson said, “to completely describe what the risks are and then act as a conduit for the capital markets to take the risk.”

Thursday, June 10, 2010

"I spent five years working in Mexico . I worked under a tourist Visa for three months and could legally renew it for three more months. After that you were working illegally. I was technically illegal for three weeks waiting on the FM3 approval.

"During that six months our Mexican and U.S. aattorneys were working to secure a permanent work visa called an 'FM3'. It was in addition to my U.S. passport that I had to show each time I entered and left the country. Barbara's was the same, except hers did not permit her to work.

"To apply for the FM3, I needed to submit the following notarized originals (not copies):

1. Birth certificate for Barbara and me.

2. Marriage certificate.

3. High school transcripts and proof of graduation.

4. College transcripts for every college I attended and proof of graduation.

5. Two letters of recommendation from supervisors I had worked for at least one year.

6. A letter from the St. Louis Chief of Police indicating that I had no arrest record in the U.S. and no outstandingwarrants, and was "a citizen in good standing".

7. Finally, I had to write a letter about myself that clearly stated why there was no Mexican citizen with my skills and why my skills were important to Mexico. We called it our 'I am the greatest person on Earth' letter. It was fun to write.

"All of the above were in English that had to be translatedinto Spanish and be certified as legal translations, and our signatures notarized. It produced a folder about 1.5 inches thick with English on the left side & Spanish on the right.

"Once they were completed Barbara and I spent about five hours, accompanied by a Mexican attorney, touring Mexican government office locations and being photographed and fingerprinted at least three times at each location, and we remember at least four locations where we were instructed on Mexican tax, labor, housing, and criminal law and that we were required to obey theirlaws or face the consequences. We could not protest any of the government's actions or we would be committing a felony. We paid out four thousand dollars in fees and bribes to complete the process. When this was done we could legally bring in our household goods that were held by U.S. Customs in Laredo, Texas. this meant we had rented furniture in Mexico while awaiting our goods. There were extensive fees involved here that the company paid."

"We could not buy a home and were required to rent at very high rates and under contract and compliance with Mexican law.

"We were required to get a Mexican driver's license. This was an amazing process. The company arranged for the licensing agency to come to our headquarters location with their photography and fingerprint equipment and the laminating machine. We showed our U.S. license, were photographed and fingerprinted again and issued the license instantly after paying out a six-dollar fee. We did not take a written or driving test and never received instructions on the rules of the road. Our only instruction was to never give a policeman your license if stopped and asked. We were instructed to hold it against the inside window away from his grasp.If he got his hands on it you would have to pay ransom to get it back.

"We then had to pay and file Mexican income tax annually using the number of our FM3 as our ID number. The company's Mexican accountants did this for us and we just signed what they prepared. It was about twenty legal size pages annually.

"The FM3 was good for three years and renewable for two more after paying more fees.

"Leaving the country meant turning in the FM3 and certifying we were leaving no debts behind and no outstanding legal affairs (warrants, tickets or liens) before our household goods were released to customs."

"It was a real adventure and if any of our Senators or Congressmen went through it once they would have a different attitudetoward Mexico.

"The Mexican government uses its vast military and police forces to keep its citizens intimidated and compliant.They never protest at their capitol or government offices, but do protest daily in front of the United States Embassy. The U.S. Embassy looks like a strongly reinforced fortress and during most protests the Mexican military surrounds the block with their men standing shoulder to shoulder in full riot gear to protect the Embassy. These protests are neaver shown on U.S. or Mexican TV. There is a large public park across the street where they do their protesting. Anything can cause a protest such as proposed law changes in California or Texas."

Please feel free to share this with everyone whothinks we are being hard on the illegals.

10. The illegal aliens in the United States have a crime rate that's two and a half times that of white non-illegal aliens. In particular, their children, are going to make a huge additional crime problem in the US .

11. During the year of 2005 there were 4 to 10 MILLION illegal aliens that crossed our Southern Border also, as many as 19,500 illegal aliens from Terrorist Countries.. Millions of pounds of drugs, cocaine, meth, heroin and marijuana, crossed into the US from the Southern border.

Verify at: Homeland Security Report:

12. The National policy Institute, estimated that the total cost of mass deportation would be between $206 and $230 billion or an average cost of between $41 and $46 billion annually over a five year period.'

The total cost is a whopping $ 338.3 BILLION DOLLARS A YEAR AND IF YOU'RE HAVING TROUBLE UNDERSTANDING THIS AMOUNT OF MONEY; IT IS $338,300,000,000.00 WHICH WOULD BE ENOUGH TO STIMULATE THE ECONOMY FOR THE CITIZENS OF THIS COUNTRY.

Are we THAT stupid? YES, FOR LETTING THOSE IN THE U.S.CONGRESS GET AWAY WITH LETTING THIS HAPPEN YEAR AFTER YEAR!!!!!

The federal government is now $13 trillion in the red, the Treasury Department reported Wednesday, marking the first time the government has sunk that far into debt and putting a sharp point on the spending debate on Capitol Hill.

Calculated down to the exact penny, the debt totaled $13,050,826,460,886.97 as of Tuesday, leaping nearly $60 billion since Friday, the previous day for which figures were released.

At $13 trillion, that figure has risen by $2.4 trillion in about 500 days since President Obama took office, or an average of $4.9 billion a day. That's almost three times the daily average of $1.7 billion under the previous administration, and led Republicans on Wednesday to place blame squarely at the feet of Mr. Obama and his fellow Democrats.

"A $13 trillion debt is an alarm bell and a wake-up call combined, but Democrats are not even trying to pass a budget," said House Minority Leader John A. Boehner, Ohio Republican. "How out of touch can Washington Democrats get? Instead of continuing to pay lip service to this issue, President Obama should call on congressional Democrats to pass a budget that provides the fiscal discipline economists say is needed to create jobs and grow our economy."

The White House would not comment for the record, but an official speaking on the condition of anonymity said the administration is "committed to restoring fiscal responsibility."

Spokesmen for the Democratic chairmen of the House and Senate budget committees didn't return messages Wednesday.

In the budget he submitted to Congress in February, the president acknowledged that his plans are not enough to reduce annual deficits to sustainable levels, which he said amounted to a yearly shortfall of 3 percent of gross domestic product. Mr. Obama called for a fiscal commission to make recommendations to close the gap, and commission members at their meeting last week said even that may not be enough.

"I think we've got to be more ambitious than that," said Alice Rivlin, former director of the Congressional Budget Office. "We really have to pick a trajectory that has the debt coming down. And there's probably no magic of whether it comes down 1 percent a year or 2 percent a year or whatever. But it's got to come down over time."

Underscoring the challenge of finding balance, Congress has not been able to pass a fiscal 2011 budget. The Senate Budget Committee has approved a proposed budget, but it has not been debated on the Senate floor, and House Democratic leaders have indicated that they may give up debt reduction altogether this year.

Several unofficial debt clocks had shown the debt crossing the $13 trillion threshold a week ago, though Treasury said those numbers were not official. Those clocks regularly recalibrate using Treasury numbers, but estimate growth rates in order to provide a per-second update on websites.

Treasury, meanwhile, reports numbers once a day and posts figures for the prior day. There was no figure for Monday because it was a federal holiday.

Total public debt includes two pots of money. One is normal government debt in the form of Treasury bills and bonds held by consumers, while the other is intragovernmental holdings, or money one part of the government borrows from another agency. That includes money borrowed from the Social Security trust funds.

Some analysts say the key measure is not the total public debt, but the debt in the hands of consumers.

That figure stood at $8.573 trillion on Tuesday, having jumped nearly $80 billion from Friday's number. By comparison, that one-day jump is well more than the $59 billion emergency war-spending bill that the Senate passed last week.

Mr. Obama charged the fiscal commission with finding ways to limit that number to 75 percent of gross domestic product.

The other half of the equation, intragovernmental debt to trust funds and the like, totaled $4.478 trillion as of Tuesday - a drop of about $20 billion from Friday's report.

The $13 trillion debt number is not significant other than that it's another milestone, but its tolling shows just how much debt has been amassed in a short time.

It took 197 days for the debt to rise from $12 trillion to $13 trillion, which is the second shortest trillion-dollar rise in history. The fastest trillion came at the end of 2008 and early 2009, when the Wall Street bailout created giant new obligations.

Congressional members and staffers, particularly on the Republican side, took a macabre interest as the debt flirted with $13 trillion all last week. Some lawmakers even jumped the gun in putting out statements based on the unofficial debt clocks.

At $13 trillion, that works out to an obligation of more than $42,000 for every U.S. resident.

"Throughout history, excessive debt has led to the demise of great nations," said Sen Tom Coburn, Oklahoma Republican. "This milestone should be a wake-up call for Congress. No one will bail out America if we continue to live beyond our means."

Earlier this year, Congress and Mr. Obama raised the country's debt limit to $14.3 trillion, hoping it would give the government enough room to spend through the end of this year.

TORONTO (Reuters) – Pressured by an aging population and the need to rein in budget deficits, Canada's provinces are taking tough measures to curb healthcare costs, a trend that could erode the principles of the popular state-funded system.

Ontario, Canada's most populous province, kicked off a fierce battle with drug companies and pharmacies when it said earlier this year it would halve generic drug prices and eliminate "incentive fees" to generic drug manufacturers.

British Columbia is replacing block grants to hospitals with fee-for-procedure payments and Quebec has a new flat health tax and a proposal for payments on each medical visit -- an idea that critics say is an illegal user fee.

And a few provinces are also experimenting with private funding for procedures such as hip, knee and cataract surgery.

It's likely just a start as the provinces, responsible for delivering healthcare, cope with the demands of a retiring baby-boom generation. Official figures show that senior citizens will make up 25 percent of the population by 2036.

"There's got to be some change to the status quo whether it happens in three years or 10 years," said Derek Burleton, senior economist at Toronto-Dominion Bank.

"We can't continually see health spending growing above and beyond the growth rate in the economy because, at some point, it means crowding out of all the other government services.

"At some stage we're going to hit a breaking point."

MIRROR IMAGE DEBATE

In some ways the Canadian debate is the mirror image of discussions going on in the United States.

Canada, fretting over budget strains, wants to prune its system, while the United States, worrying about an army of uninsured, aims to create a state-backed safety net.

Healthcare in Canada is delivered through a publicly funded system, which covers all "medically necessary" hospital and physician care and curbs the role of private medicine. It ate up about 40 percent of provincial budgets, or some C$183 billion ($174 billion) last year.

Spending has been rising 6 percent a year under a deal that added C$41.3 billion of federal funding over 10 years.

But that deal ends in 2013, and the federal government is unlikely to be as generous in future, especially for one-off projects.

"As Ottawa looks to repair its budget balance ... one could see these one-time allocations to specific health projects might be curtailed," said Mary Webb, senior economist at Scotia Capital.

Brian Golden, a professor at University of Toronto's Rotman School of Business, said provinces are weighing new sources of funding, including "means-testing" and moving toward evidence-based and pay-for-performance models.

"Why are we paying more or the same for cataract surgery when it costs substantially less today than it did 10 years ago? There's going to be a finer look at what we're paying for and, more importantly, what we're getting for it," he said.

Other problems include trying to control independently set salaries for top hospital executives and doctors and rein in spiraling costs for new medical technologies and drugs.

Ontario says healthcare could eat up 70 percent of its budget in 12 years, if all these costs are left unchecked.

"Our objective is to preserve the quality healthcare system we have and indeed to enhance it. But there are difficult decisions ahead and we will continue to make them," Ontario Finance Minister Dwight Duncan told Reuters.

The province has introduced legislation that ties hospital chief executive pay with the quality of patient care and says it wants to put more physicians on salary to save money.

In a report released last week, TD Bank said Ontario should consider other proposals to help cut costs, including scaling back drug coverage for affluent seniors and paying doctors according to quality and efficiency of care.

WINNERS AND LOSERS

The losers could be drug companies and pharmacies, both of which are getting increasingly nervous.

"Many of the advances in healthcare and life expectancy are due to the pharmaceutical industry so we should never demonize them," said U of T's Golden. "We need to ensure that they maintain a profitable business but our ability to make it very very profitable is constrained right now."

Scotia Capital's Webb said one cost-saving idea may be to make patients aware of how much it costs each time they visit a healthcare professional. "(The public) will use the services more wisely if they know how much it's costing," she said.

"If it's absolutely free with no information on the cost and the information of an alternative that would be have been more practical, then how can we expect the public to wisely use the service?"

But change may come slowly. Universal healthcare is central to Canada's national identity, and decisions are made as much on politics as economics.

"It's an area that Canadians don't want to see touched," said TD's Burleton. "Essentially it boils down the wishes of the population. But I think, from an economist's standpoint, we point to the fact that sometimes Canadians in the short term may not realize the cost."

Paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of this year, a USA TODAY analysis of government data finds.At the same time, government-provided benefits — from Social Security, unemployment insurance, food stamps and other programs — rose to a record high during the first three months of 2010.

Those records reflect a long-term trend accelerated by the recession and the federal stimulus program to counteract the downturn. The result is a major shift in the source of personal income from private wages to government programs.

The trend is not sustainable, says University of Michigan economist Donald Grimes. Reason: The federal government depends on private wages to generate income taxes to pay for its ever-more-expensive programs. Government-generated income is taxed at lower rates or not at all, he says. "This is really important," Grimes says.

The recession has erased 8 million private jobs. Even before the downturn, private wages were eroding because of the substitution of health and pension benefits for taxable salaries.

The Bureau of Economic Analysis reports that individuals received income from all sources — wages, investments, food stamps, etc. — at a $12.2 trillion annual rate in the first quarter.

Key shifts in income this year:

• Private wages. A record-low 41.9% of the nation's personal income came from private wages and salaries in the first quarter, down from 44.6% when the recession began in December 2007.

•Government benefits. Individuals got 17.9% of their income from government programs in the first quarter, up from 14.2% when the recession started. Programs for the elderly, the poor and the unemployed all grew in cost and importance. An additional 9.8% of personal income was paid as wages to government employees.

The shift in income shows that the federal government's stimulus efforts have been effective, says Paul Van de Water, an economist at the liberal Center on Budget and Policy Priorities.

"It's the system working as it should," Van de Water says. Government is stimulating growth and helping people in need, he says. As the economy recovers, private wages will rebound, he says.

Economist Veronique de Rugy of the free-market Mercatus Center at George Mason University says the riots in Greece over cutting benefits to close a huge budget deficit are a warning about unsustainable income programs.

Economist David Henderson of the conservative Hoover Institution says a shift from private wages to government benefits saps the economy of dynamism. "People are paid for being rather than for producing," he says.

Tuesday, May 18, 2010

The new healthcare law will pack 32 million newly insured people into emergency rooms already crammed beyond capacity, according to experts on healthcare facilities.

A chief aim of the new healthcare law was to take the pressure off emergency rooms by mandating that people either have insurance coverage. The idea was that if people have insurance, they will go to a doctor rather than putting off care until they faced an emergency.

People who build hospitals, however, say newly insured people will still go to emergency rooms for primary care because they don’t have a doctor.

“Everybody expected that one of the initial impacts of reform would be less pressure on emergency departments; it’s going to be exactly the opposite over the next four to eight years,” said Rich Dallam, a healthcare partner at the architectural firm NBBJ, which designs healthcare facilities.

“We don’t have the primary care infrastructure in place in America to cover the need. Our clients are looking at and preparing for more emergency department volume, not less,” he said.

Massachusetts in 2006 created near-universal coverage for residents, which was supposed to ease the traffic in hospital emergency rooms.

But a recent poll by the American College of Emergency Physicians found that nearly two-thirds of the state’s residents say emergency department wait times have either increased or remained the same.

A February 2010 report by The Council of State Governments found that wait times had not abated since the law took effect.

“That is not an unrealistic question about what’s going to happen in the next four years as you bring all these people on; who are they going to see?” McDermott said.

The Washington congressman tried to include a provision in the healthcare bill he thought would increase the number of doctors.

McDermott’s legislation would have required the government to pay for students’ medical education in return for students serving four years as a primary care physician. The measure did not make it on the final bill that eventually became law.

McDermott stressed that creating a “whole new cadre of doctors” needs to begin now to meet the rising need from patients in the future.

While the measure wouldn’t prevent the infrastructure crunch, it would have provided new doctors for people seeking care.

Richard Foster, Chief Actuary at the Centers for Medicare and Medicaid Services, told The Hill that the current dearth of primary care physicians could lead to greater stress on hospital emergency rooms.

“The supply of doctors can’t be increased very quickly – there’s a time lag,” he said, adding, “Is the last resort to newly covered people the emergency room? I would say that is a possibility, but I wouldn’t say anybody has a very good handle on exactly how much of an infrastructure problem there will be or exactly how it might work out.”

The Academy of Architecture for Health predicts hospitals will need at least $2 trillion over the next 20 years to meet the coming demand.

“As more people have access, you have to deal with the increased capacity,” said Andrew Goldberg, senior director of federal relations at the American Institute of Architects. “At the moment there is not a lot of building going on because of the economy and a lot of health care facilities can’t get the financing. We’ve been working on the Hill to try to address that issue.”

The group has called on Congress to beef-up bonding authorities and expand energy efficient tax breaks for professional buildings. The vehicle targeted is the green energy legislation making its way through the House Ways and Means Committee and Senate Finance.

Dan Noble, a principal at the Dallas-based architecture firm HKS Inc., which also specializes in designing health care facilities, believes the only remedy to meet the coming demand on hospitals is to start projects immediately.

“We would have to get very busy soon,” he said. “It would take a fairly aggressive building campaign for the next decade.”

Texas doctors are opting out of Medicare at alarming rates, frustrated by reimbursement cuts they say make participation in government-funded care of seniors unaffordable.

Two years after a survey found nearly half of Texas doctors weren't taking some new Medicare patients, new data shows 100 to 200 a year are now ending all involvement with the program. Before 2007, the number of doctors opting out averaged less than a handful a year.

“This new data shows the Medicare system is beginning to implode,” said Dr. Susan Bailey, president of the Texas Medical Association. “If Congress doesn't fix Medicare soon, there'll be more and more doctors dropping out and Congress' promise to provide medical care to seniors will be broken.”

More than 300 doctors have dropped the program in the last two years, including 50 in the first three months of 2010, according to data compiled by the Houston Chronicle. Texas Medical Association officials, who conducted the 2008 survey, said the numbers far exceeded their assumptions.

The largest number of doctors opting out comes from primary care, a field already short of practitioners nationally and especially in Texas. Psychiatrists also make up a large share of the pie, causing one Texas leader to say, “God forbid that a senior has dementia.”

The opt-outs follow years of declining Medicare reimbursement that culminated in a looming 21 percent cut in 2010. Congress has voted three times to postpone the cut, which was originally to take effect Jan. 1. It is now set to take effect June 1.

Not cost-effectiveThe uncertainty proved too much for Dr. Guy Culpepper, a Dallas-area family practice doctor who says he wrestled with his decision for years before opting out in March. It was, he said, the only way “he could stop getting bullied and take control of his practice.”

“You do Medicare for God and country because you lose money on it,” said Culpepper, a graduate of the University of Texas Medical School at Houston. “The only way to provide cost-effective care is outside the Medicare system, a system without constant paperwork and headaches and inadequate reimbursement.”

Ending Medicare participation is just one consequence of the system's funding problems. In a new Texas Medical Association survey, opting out was one of the least common options doctors have taken or are planning as a result of declining Medicare funding — behind increasing fees, reducing staff wages and benefits, reducing charity care and not accepting new Medicare patients.

In 2008, 42 percent of Texas doctors participating in the survey said they were no longer accepting all new Medicare patients. Among primary-care doctors, the percentage was 62 percent.

The impact on doctors has not been lost on their patients. Kathy Sweeney, a Houston retiree, twice has been turned away by specialists because they weren't accepting new Medicare patients. She worries her doctors might have to drop her if Medicare cuts go through and they can't afford to continue in the program.

“I've talked to them about the possibility,” said Sweeney, who sent her legislators a letter calling on them to fix Medicare. “They're hanging in there as long as there's not a severe cut, but just thinking I couldn't continue doctor-patient relationships I built up over years is disturbing. Seniors should be able to see the doctors they want.”

The problem dates back to 1997, when Congress passed a balanced budget law that included a Medicare payment formula aimed at reining in spending. The formula, which assumed low growth rates, called for payment cuts if spending exceeded goals, a scenario that occurred year after year as health care costs grew. The scheduled cuts, expected to be modest, turned out to be large.

Congress would overturn the cuts, but their short-term fixes didn't keep up with inflation. The Texas Medical Association says the cumulative effect since 2001 already amounts to an inflation-adjusted cut of 20.9 percent. In 2001, doctors receiving a $1,000 Medicare payment made roughly $410, after taking out operating expenses. In 2010, they'll net $290. If the scheduled 21.2 percent cut goes through, they'd net $72, effectively an 83 percent cut since 2001.

The issue caused the Texas Medical Association to break ranks with the American Medical Association and oppose health care reform efforts throughout 2009. Then TMA President Dr. William Fleming said “reform is doomed to failure” without Medicare reform and called Congress' failure to devise a rational payment plan “an insult to seniors, people with disabilities and military families.”

No surprise to senatorU.S. Sen. John Cornyn, R-Texas, said he isn't surprised by the new opt-out numbers, allowing that Congress' inability to reform Medicare is leaving “seniors without access and breaking the promise we made to them.”

“The problem has been how to eliminate the cuts without running up the deficit,” said Cornyn, responding to blame U.S. Rep. Gene Green, D-Houston, placed on the Senate for not passing a House bill that would have provided a longer-term Medicare fix. “There hasn't been the political will, but we really have no choice but to fix it.”

The growth in Texas Medicare opt-outs began in earnest in 2007, when 70 doctors notified Trailblazer Health Enterprises, the state's Medicare carrier, they would no longer participate, up from seven in 2006. The numbers jumped to 151 in 2008, fell back to 135 in 2009 and are on pace for 200 in 2010. From 1998 to 2002, by contrast, no more than three a year opted out.

Now, according to a Texas Medical Association new poll, more than four in 10 doctors are considering the move.

“I've been in practice 24 years, and a lot of my patients got old right along with me,” Culpepper said. “It's stressful to tell them you're leaving Medicare and they're responsible for payments if they want to stay with you. You feel like you're abandoning them.”

President Hugo Chavez announced Saturday the expropriation of a group of iron, aluminum and transportation companies in Venezuela's mining region.

Among the expropriated companies is Materiales Siderurgicos, or Matesi, which is the Venezuelan subsidiary of Luxembourg-based steel maker Tenaris SA.

Venezuela's socialist president said in a televised that his government was going to take over Matesi because "we couldn't reach an amicable and reasonable settlement with the owners."

Chavez said production at the company has been paralyzed since midway through last year, when Venezuela's president announced plans to nationalize it.

Chavez said he was also going to expropriate Venezuelan-owned Orinoco Iron and aluminum-maker Norpro de Venezuela C.A., which is an affiliate of the U.S. company Norpro in association with France's Saint Gobain, among other companies.

As well, Venezuela will take over transport companies that ship raw materials in areas southeast of Caracas. He did not name the companies.

Since coming to power more than a decade ago, Chavez has nationalized major companies in the electricity, oil, steel and coffee sectors, as well as other private businesses.

Reality Check: Our nation's debt is currently over $12.9 TRILLION ($117,682 per taxpayer). We are in so deep that even if we seized 100% of the fortune's of Bill Gates $53B & Warren Buffett $47B, we would only be able to pay LESS THAN ONE PERCENT (.77%) of our total debt!Our nation's debt is currently SO HIGH, (over $12.9 TRILLION, $117,682 per taxpayer) That even if we seized the ENTIRE FORTUNES of the ONE HUNDRED RICHEST PEOPLE IN THE WORLD ($1.4 trillion) we would still only be able to pay 10.8% of our total debt!

Even the entire vast fortune's of the ONE THOUSAND RICHEST PEOPLE IN THE WORLD, would come NO WHERE NEAR paying off our debt.

But you know who is expected to pay off the debt...YOU AND I, OUR CHILDREN, OUR GRANDCHILDREN!!!...

So many letter writers have based their arguments on how this land is made up of immigrants. Ernie Lujan for one, suggests we should tear down the Statue of Liberty because the people now in question aren't being treated the same as those who passed through Ellis Island and other ports of entry.

Maybe we should turn to our history books and point out to people like Mr. Lujan why today's American is not willing to accept this new kind of immigrant any longer. Back in 1900 when there was a rush from all areas of Europe to come to the United States, people had to get off a ship and stand in a long line in New York and be documented. Some would even get down on their hands and knees and kiss the ground. They made a pledge to uphold the laws and support their new country in good and bad times. They made learning English a primary rule in their new American households and some even changed their names to blend in with their new home.

They had waved good bye to their birth place to give their children a new life and did everything in their power to help their children assimilate into one culture. Nothing was handed to them. No free lunches, no welfare, no labor laws to protect them. All they had were the skills and craftsmanship they had brought with them to trade for a future of prosperity.

Most of their children came of age when World War II broke out. My father fought along side men whose parents had come straight over from Germany , Italy , France and Japan . None of these 1st generation Americans ever gave any thought about what country their parents had come from. They were Americans fighting Hitler, Mussolini and the Emperor of Japan . They were defending the United States of America as one people.

When we liberated France , no one in those villages were looking for the French-American or the German American or the Irish American. The people of France saw only Americans. And we carried one flag that represented one country. Not one of those immigrant sons would have thought about picking up another country's flag and waving it to represent who they were. It would have been a disgrace to their parents who had sacrificed so much to be here. These immigrants truly knew what it meant to be an American. They stirred the melting pot into one red, white and blue bowl.

And here we are with a new kind of immigrant who wants the same rights and privileges. Only they want to achieve it by playing with a different set of rules, one that includes the entitlement card and a guarantee of being faithful to their mother country. I'm sorry, that's not what being an American is all about. I believe that the immigrants who landed on Ellis Island in the early 1900's deserve better than that for all the toil, hard work and sacrifice in raising future generations to create a land that has become a beacon for those legally searching for a better life. I think they would be appalled that they are being used as an example by those waving foreign country flags.

And for that suggestion about taking down the Statue of Liberty , it happens to mean a lot to the citizens who are voting on the immigration bill. I wouldn't start talking about dismantling the United States just yet.

(Updates with General Casey’s comment in 10th and 11th paragraphs, McCaskill comment in third paragraph from end.)

By Tony Capaccio

May 6 (Bloomberg) -- KBR Inc. was selected for a no-bid contract worth as much as $568 million through 2011 for military support services in Iraq, the Army said.

The Army announced its decision yesterday only hours after the Justice Department said it will pursue a lawsuit accusing the Houston-based company of taking kickbacks from two subcontractors on Iraq-related work. The Army also awarded the work to KBR over objections from members of Congress, who have pushed the Pentagon to seek bids for further logistics contracts.

The Justice Department said the government will join a suit filed by whistleblowers alleging that two freight-forwarding firms gave KBR transportation department employees kickbacks in the form of meals, drinks, sports tickets and golf outings.

“Defense contractors cannot take advantage of the ongoing war effort by accepting unlawful kickbacks,” Assistant Attorney General Tony West said in a statement.

KBR, the Army’s largest contractor in Iraq, will review the litigation when it is received and “will continue to cooperate with the government,” company spokeswoman Heather Browne said in an e-mail. “Gifts of dinners, baseball tickets and similar items would violate KBR policies and KBR was not aware of these violations.”

KBR will continue to provide services in Iraq such as housing, meals, laundry, showers, water purification and bathroom cleaning under the new order, which was placed under a military contract KBR won in late 2001, shortly after the U.S. invaded Afghanistan.

‘Appropriate Safeguards’

The Army has “reviewed the government’s notice to intervene” in the whistleblower lawsuit, Army spokesman Dan Carlson said. “We feel we have appropriate safeguards in place” to protect the government’s interests.

The no-bid work order is unusual because the Army, at the insistence of Congress, has since April 2008 put all logistics orders to bid, pitting KBR against Falls Church, Virginia-based DynCorp International Inc. and Irving, Texas-based Fluor Corp.

The Army didn’t put this work out for bids because U.S. commanders in Iraq advised against it, saying that enlisting a new company would be too disruptive as the U.S withdraws, Army program director Lee Thompson said in an interview before the Justice Department action was announced.

Odierno’s View

The view of General Ray Odierno, the U.S. military commander in Iraq, was crucial to the decision, Army Chief of Staff General George Casey told reporters today.

“Odierno said, ‘I’ve got three million pieces of equipment I’ve got to get out of Iraq, I’ve got 100 or so bases to close, I’ve got to move 80,000-plus people out of here and you want me to change horses in the middle of the stream?’” Casey recounted.

The U.S. force in Iraq is scheduled to shrink from 94,000 troops today to 50,000 by August, with a complete withdrawal by December 2011.

The Army, in its statement yesterday, said putting to bid an order for 18 months’ work and making the transition to a new contractor would cost at least $77 million. The KBR work order will be awarded by Aug. 31, said Mike Hutchison, deputy director of Army logistics contracting.

Earlier U.S. Lawsuit

The lawsuit is the second government action this year against KBR. The U.S. sued the company on April 1, alleging that it used private armed security guards in Iraq between 2003 and 2006 in violation of its Army contract and then improperly billed for their services.

Before yesterday’s Justice Department announcement, the Army had said in an e-mailed statement that it was aware of the April lawsuit and would use “additional oversight measures to ensure only reasonable, allowable costs are paid” under the new work order.

The new lawsuit, filed in a Texas federal court, was based on information from two whistleblowers who work in the air cargo industry, the Justice Department statement said. The whistleblowers can get a portion of any money the Justice Department obtains in the case.

Senate Objections

KBR’s no-bid work order drew criticism from two U.S. senators even before it was announced.

Senator Claire McCaskill, the Missouri Democrat who heads a subcommittee that oversees military contracting, and the panel’s ranking Republican, Susan Collins of Maine, wrote Defense Secretary Robert Gates on April 30 urging the Army against “continued reliance” on KBR in light of the Justice Department’s April lawsuit.

“The Army has a big burden to demonstrate that a decision to not compete is in the best interest of the military and American taxpayers,” McCaskill said in a statement last night. “We will hold their feet to the fire and continue to demand accountability on this decision.”

Under the new competitive-bid approach, KBR on March 2 won a one-year, $571 million contract with four option years that, if exercised, could be worth as much as $2.77 billion.

That contract calls for KBR to provide services including transportation and postal operations. DynCorp initially protested the award and then dropped its objections.

--Editors: Bill Schmick, Ann Hughey.

To contact the reporter on this story: Tony Capaccio at acapaccio@bloomberg.net

To contact the editor responsible for this story: Jim Kirk at jkirk12@bloomberg.net

Announcing a 6.7 billion dollar loss in the first quarter, Freddie Mac said it would need the new funding by June 30 this year.

The Washington-area company has already received more than 50 billion dollars in taxpayers cash to cover losses from toxic assets.

It warned that further demands would be on the way: "Freddie Mac expects to request additional draws," the firm said in a statement.

"The size and timing of such draws will be determined by a variety of factors that could adversely affect the company's net worth."

In 2008, the government pledged to ensure that Freddie Mac, and its larger sister organization Fannie Mae, kept a "positive net worth."

The deal was designed to prop up the vital US housing market from collapsing totally and pushing the economy over the precipice.

But in a sign that the US housing sector is still in difficulty, Freddie said the percentage of its loans not paid on time or in full rose to 4.13 percent in the first three months of the year.

In the final three months of last year the rate stood at 3.98 percent.

The future of Fannie and Freddie has become the latest bone of contention between Democrats who argue they must remain government-backed to aid low-income housing and Republicans who advocate their privatization.

In March, Treasury Secretary Timothy Geithner swatted aside pressure for a swift reform of the mortgage giants as data pointed to a still struggling real estate market.

Geithner told Congress any restructuring of Fannie Mae and Freddie Mac, which received a 100-billion-dollar-plus government bailout at the height of the housing crisis, "must be done as part of a reform of the wider housing finance system."

Geithner argued reforms would "take several months" to develop and should only be "enacted and executed at a time of greater market stability."

Originally published 12:00 a.m., May 5, 2010, updated 03:27 a.m., May 5, 2010

NUGENT: Is the kettle black enough?

Ted Nugent

If ever there was a case of the proverbial pot calling the kettle black, it is the cluster of new financial "reform" regulations Washington politicians are trying to foist on the back of Wall Street.

In a typical political smoke-and-mirrors misdirection, President Obama wants us to believe greedy Wall Street bankers are to blame for our economy sinking in financial quicksand and that more government regulations and controls are the answer. Don't believe it.

The truth is that the federal government, as always, has overtly wasted, lost and blown far more of our hard-earned tax dollars than Wall Street crooks could have ripped off in their wildest Bernie Madoff imaginations. Our politicians are the real bandits and culprits of our economic calamity.

What our elected idiots willfully and with malicious forethought did not do - even when warned to do so by Fed Chairman Alan Greenspan in 2005 - was rein in the out-of-control, government-managed Fannie Mae and Freddie Mac.

Regarding Fannie and Freddie, Mr. Greenspan told Congress in 2005, "We are placing the total financial system of the future at substantial risk."

A significant Fannie and Freddie reform bill was passed by the Senate Banking Committee in 2005, but the Democrats prevented the bill from becoming law and thus set in motion the events that would steer our economy straight off the cliff. While this economic storm was brewing, then-Sen. Barack Obama collected more than $125,000 from Fannie and Freddie in political contributions.

The Democrats' pathetic, unethical and arguably criminal lack of control of Fannie and Freddie, coupled with their own pressure on banks to make high-risk home loans to people who couldn't afford them, is the reason for our economic meltdown. Believe it and blame the Democrats - and the Republicans who failed to do a thing.

Now those very same Democrats want to control Wall Street. Unbelievable. Welcome to the Planet of the Apes.

America is going bankrupt not because of crooked and unethical Wall Street investment bankers. We are in this financial morass because of a bloated, ineffective, unaccountable and wasteful Fedzilla.

Poll after poll finds Americans have little faith in our professional political windbags, who, in addition to causing our current economic meltdown, have robbed and plundered the Social Security Trust Fund and Medicare over the years to the point that both these entities are not only broke, but massively in debt. President Obama's solution: more government borrowing, taxing and spending. Anti-social insecurity anyone?

No one in Washington ever accepts any blame or fault. There is always someone or something else to blame. This time, it's Wall Street's fault, but anyone with an ounce of common sense and a modicum of desire to know the truth understands that the underlying fault for all - yes, all - of our economic, social and cultural problems is Fedzilla and the political punks who feed it for their own political profit. To hell with America; they need votes.

How dare these political frauds shake their own corrupt finger at Wall Street. Where are the journalists who should be shouting daily questions at these political frauds and pouring buckets of hot ink on the editorial pages of newspapers and blogs across the country, exposing these elected frauds who are financially raping and plundering America? Our forefathers would encourage us to get a bucket of hot tar and some feathers and run these crooks out of town.

If we continue down this economically suicidal, massive-deficit-spending and higher-tax path that President Obama is intent on, our economy will continue to grind to a halt, unemployment will remain high, investments will dry up, and entrepreneurs will fade away. I'm just a guitar player, and I figured that out decades ago.

The Tea Party gets it. Its members understand that out-of-control and unsustainable government spending has put America on the path to financial ruin. And what does our lapdog media do? Castigate the Tea Party as being a bunch of illiterate racists. What a joke. I heard the circus is looking for some new clowns.

I'll bet the president a backyard beer at the White House that many more Americans would entrust their future to Wall Street bankers than to the elected frauds and idiots who have plundered the national treasury and put America's future on thin ice.

Monday, May 03, 2010

I'm Arizona State Senator Sylvia Allen. I want to explain SB 1070 which I voted for and was just signed by Governor Jan Brewer.

Rancher Rob Krantz was murdered by the drug cartel on his ranch a month ago. I participated in a senate hearing two weeks ago on the border violence, here is just some of the highlights from those who testified.

The people who live within 60 to 80 miles of the Arizona/Mexico Border have for years been terrorized and have pleaded for help to stop the daily invasion of humans who cross their property . One Rancher testified that 300 to 1200 people a DAY come across his ranch vandalizing his property, stealing his vehicles and property, cutting down his fences, and leaving trash. In the last two years he has found 17 dead bodies and two Koran bibles.

Another rancher testified that daily drugs are brought across his ranch in a military operation. A point man with a machine gun goes in front, 1/2 mile behind are the guards fully armed, 1/2 mile behind them are the drugs, behind the drugs 1/2 mile are more guards. These people are violent and they will kill anyone who gets in the way. This was not the only rancher we heard that day that talked about the drug trains.

One man told of two illegal's who came upon his property one shot in the back and the other in the arm by the drug runners who had forced them to carry the drugs and then shot them. Daily they listen to gun fire during the night it is not safe to leave his family alone on the ranch and they can't leave the ranch for fear of nothing being left when they come back.

The border patrol is not on the border. They have set up 60 miles away with check points that do nothing to stop the invasion. They are not allowed to use force in stopping anyone who is entering. They run around chasing them, if they get their hands on them then they can take them back across the border.

Federal prisons have over 35% illegal's and 20% of Arizona prisons are filled with illegal's. In the last few years 80% of our law enforcement that have been killed or wounded have been by an illegal.

The majority of people coming now are people we need to be worried about. The ranchers told us that they have seen a change in the people coming they are not just those who are looking for work and a better life.

The Federal Government has refused for years to do anything to help the border states. We have been over run and once they are here we have the burden of funding state services that they use. Education cost have been over a billion dollars. The healthcare cost billions of dollars. Our State is broke, $3.5 billion deficit and we have many serious decisions to make. One is that we do not have the money to care for any who are not here legally. It has to stop.The border can be secured. We have the technology we have the ability to stop this invasion. We must know who is coming and they must come in an organized manner legally so that we can assimilate them into our population and protect the sovereignty of our country. We are a nation of laws. We have a responsibility to protect our citizens and to protect the integrity of our country and the government which we live under.

I would give amnesty today to many, but here is the problem, we dare not do this until the Border is secure. It will do no good to forgive them because thousands will come behind them and we will be over run to the point that there will no longer be the United States of America but a North American Union of open borders. I ask you what form of government will we live under? How long will it be before we will be just like Mexico, Canada or any of the other Central American or South American countries? We have already lost our language, everything must be printed in Spanish also. We have already lost our history it is no longer taught in our schools. And we have lost our borders.

The leftist media has distorted what SB 1070 will do. It is not going to set up a Nazi Germany. Are you kidding. The ACLU and the leftist courts will do everything to protect those who are here illegally, but it was an effort to try and stop illegal's from setting up businesses, and employment, and receiving state services and give the ability to local law enforcement when there is probable cause like a traffic stop to determine if they are here legally. Federal law is very clear if you are here on a visa you must have your papers on you at all times. That is the law. In Arizona all you need to show you are a legal citizen is a driver license, MVD identification card, Native American Card, or a Military ID. This is what you need to vote, get a hunting license, etc.. So nothing new has been added to this law. No one is going to be stopped walking down the street etc... The Socialist who are in power in DC are angry because we dare try and do something and that something the Socialist wants us to do is just let them come. They want the "Transformation" to continue.

Maybe it is too late to save America. Maybe we are not worthy of freedom anymore. But as an elected official I must try to do what I can to protect our Constitutional Republic. Living in America is not a right just because you can walk across the border. Being an American is a responsibility and it comes by respecting and upholding the Constitution the law of our land which says what you must do to be a citizen of this country. Freedom is not free.

(Also, she doesn't mention that we hear regularly that Phoenix is the kidnap capitol of the country, and those who are being kidnapped are illegals who are being kidnapped by the coyotes. For those of you who are not familiar with the term coyotes, They are the ones who smuggle the illegals into the area and hide them in "drop houses".)

Saturday, May 01, 2010

"In short, GM is using government money to pay back government money to get more government money. And at a 2% lower interest rate at that. This is a nifty scheme to refinance GM's government debt--not pay it back!"

The General Accountability Office concluded, ""The Treasury is unlikely to recover the entirety of its investment in Chrysler or GM."

GM CEO Ed Whitacre announced in a Wall Street Journal column Wednesday that his company has paid back its government bailout loan "in full, with interest, years ahead of schedule." He is even running TV ads on all major networks to that effect--a needless expense given that a credulous media is only too happy to parrot his claims for free. Detroit Free Press' Mike Thompson, for example, advises bailout proponents to start "warming up their vocal chords" to jeer their opponents with chants of "I told you so."

But before belting out their victory aria, GM-boosters ought to hear the whole story--not just the fairytale version about Government Motors' grand comeback that Mr. Whitacre is feeding them.

Uncle Sam gave GM $49.5 billion last summer in aid to finance its bankruptcy. (If it hadn't, the company, which couldn't raise this kind of money from private lenders, would have been forced into liquidation, its assets sold for scrap.) So when Mr. Whitacre publishes a column with the headline, "The GM Bailout: Paid Back in Full," most ordinary mortals unfamiliar with bailout minutia would assume that he is alluding to the entire $49.5 billion. That, however, is far from the case.

Because a loan of such a huge amount would have been politically controversial, the Obama administration handed GM only $6.7 billion as a pure loan. (It asked for only a 7% interest rate--a very sweet deal considering that GM bonds at that time were trading below junk level.) The vast bulk of the bailout money was transferred to GM through the purchase of 60.8% equity stake in the company--arguably an even worse deal for taxpayers than the loan, given that the equity position requires them to bear the risk of the investment without any guaranteed return. (The Canadian government likewise gave GM $1.4 billion as a pure loan, and another $8.1 billion for an 11.7% equity stake. The U.S. and Canadian government together own 72.5% of the company.)

But when Mr. Whitacre says GM has paid back the bailout money in full, he means not the entire $49.5 billion--the loan and the equity. In fact, he avoids all mention of that figure in his column. He means only the $6.7 billion loan amount.

But wait! Even that's not the full story given that GM, which has not yet broken even, much less turned a profit, can't pay even this puny amount from its own earnings.

So how is it paying it?

As it turns out, the Obama administration put $13.4 billion of the aid money as "working capital" in an escrow account when the company was in bankruptcy. The company is using this escrow money--government money--to pay back the government loan.

GM claims that the fact that it is even using the escrow money to pay back the loan instead of using it all to shore itself up shows that it is on the road to recovery. That actually would be a positive development--although hardly one worth hyping in ads and columns--if it were not for a further plot twist.

Sean McAlinden, chief economist at the Ann Arbor-based Center for Automotive Research, points out that the company has applied to the Department of Energy for $10 billion in low (5%) interest loan to retool its plants to meet the government's tougher new CAFÉ (Corporate Average Fuel Economy) standards. However, giving GM more taxpayer money on top of the existing bailout would have been a political disaster for the Obama administration and a PR debacle for the company. Paying back the small bailout loan makes the new--and bigger--DOE loan much more feasible.

In short, GM is using government money to pay back government money to get more government money. And at a 2% lower interest rate at that. This is a nifty scheme to refinance GM's government debt--not pay it back!

GM boasts that, because it is doing so well, it is paying the $6.7 billion five years ahead of schedule since it was not due until 2015. So will there be an accelerated payback of the rest of the $49.6 billion investment? No. That goal has been pushed back, as it turns out.

In order to recover that investment, the government has to sell its equity. It plans to do that only when GM becomes a publicly traded company once again. GM was hoping to turn a profit by the end of 2010 and float an initial public offering this winter. However, GM Chief Financial Officer Chris Liddell, when queried about that timeline a few days ago, demurred. The offering will be made, he said, "when the markets and the company are ready."

(Take that, taxpayers!)

The reality is that there is no certainty that GM will ever be able to make taxpayers whole. Some analysts such as Center for Automotive Research's Sean McAlinden and Global Insight's George Magliano believe that it will--eventually. McAlinden maintains that this will happen when the company's market capitalization touches $60 billion. (At GM's peak in 2000, this level was only $57 billion.) This is a challenging but not an impossible goal--provided the economy does not dip into another recession, he maintains. Magliano too maintains that the company will be able to pay back taxpayers if the industry is able to ramp up annual vehicle sales from the expected 10.8 million this year to 17 million in 2014 and GM captures 20% of these sales.

The General Accountability Office, on the other hand, remains deeply pessimistic. It concluded in a December report (which a more recent April report has said nothing to contradict, despite media spin to the contrary) that: "The Treasury is unlikely to recover the entirety of its investment in Chrysler or GM, given that the companies' values would have to grow substantially more than they have in the past."

Mr. Whitacre's bailout payback ploy is a desperate attempt to win back the car-buying public deeply disgusted by the spectacle of GM rattling its tin-cup before Uncle Sam. But the fact of the matter is that the company is still deep in the hole. It might claw its way back – or it might not. But surely it's premature for its media boosters to pop open the champagne bottle without getting their story straight?

Shikha Dalmia is a senior analyst at Reason Foundation and a biweekly Forbes columnist

Thursday, April 29, 2010

Data shows the pay gap between state and local government and private sector workers. (Chris Edwards/Cato Institute)

For decades, public sector unions have peddled the fantasy that government employees were paid less than their counterparts in the private sector. In fact, the pay disparity is the other way around. Government workers, especially at the federal level, make salaries that are scandalously higher than those paid to private sector workers. And let's not forget private sector workers not only have to be sufficiently productive to earn their paychecks, they also must pay the taxes that support the more generous jobs in the public sector.

Data compiled by the Commerce Department's Bureau of Economic Analysis reveals the extent of the pay gap between federal and private workers. As of 2008, the average federal salary was $119,982, compared with $59,909 for the average private sector employee. In other words, the average federal bureaucrat makes twice as much as the average working taxpayer. Add the value of benefits like health care and pensions, and the gap grows even bigger. The average federal employee's benefits add $40,785 to his annual total compensation, whereas the average working taxpayer's benefits increase his total compensation by only $9,881. In other words, federal workers are paid on average salaries that are twice as generous as those in the private sector, and they receive benefits that are four times greater.

The situation is the same when state and local government compensation data is compared with that of the private sector. As the Cato Institute's Chris Edwards notes in the current issue of the Cato Journal, "The public sector pay advantage is most pronounced in benefits. Bureau of Economic Analysis data show that average compensation in the private sector was $59,909 in 2008, including $50,028 in wages and $9,881 in benefits. Average compensation in the public sector was $67,812, including $52,051 in wages and $15,761 in benefits." Those figures likely underestimate the true gap on the benefits side because the typical government employee gets a guaranteed defined benefit pension under very generous terms, while the private sector norm is a 401(K) defined contribution plan that is subject to the ups and downs of the economy.

With the federal deficit and national debt heading into the stratosphere, taxpayers can no longer afford to support such lucrative government compensation. Public sector pay and benefits at all levels should be reduced to make it comparable to the wages and benefits earned by the average working taxpayer. The first politician to propose a five-year plan for this purpose is likely to be cheered mightily by taxpayers.!

Read more at the Washington Examiner: http://www.washingtonexaminer.com/opinion/Want-to-get-rich_-Work-for-feds-92316619.html#ixzz0mW2o8u55